Iowa regulators are investigating an insurance agency accused of overbilling thousands of government employees for health care coverage.
The Iowa Insurance Division is focused on Two Rivers Insurance Co. The agency had been acting as an independent agent selling insurance for Wellmark Blue Cross and Blue Shield and other companies, the Des Moines Register reported.
Wellmark representative Traci McBee said the company ended its relationship with Two Rivers on April 9 because Two Rivers had “marked up some of its customers’ health insurance premiums without Wellmark’s knowledge.”
McBee said policyholders who received a bill from a Two Rivers subsidiary, Employee Benefit Systems, appear to have been affected. Wellmark initiated an audit, then reported its concerns to state regulators.
The company contends more than 10,000 Iowans may have been affected over several years by hidden fees on Wellmark premiums. They say those markups range from 4 percent to 7 percent.
Todd Ackerman of Two Rivers said the company “categorically disagrees” with Wellmark’s conclusion. He acknowledged that Wellmark’s allegations “revolve around the way we were compensated, and we believe we were transparent.”
Ackerman said any undisclosed fees in “medical premiums” billed by Two Rivers might have been disclosed in written agreements with employers, but not broken out on statements seen by policyholders.
“So it may not have necessarily been on the billing statements,” he said.
State insurance commissioner Nick Gerhart acknowledged that the state was investigating but provided no details.
“What I can say is that we have an open investigation and we are absolutely investigating this as we speak,” he said. “We’ve just started the investigation, so we’re trying to get information. We are issuing subpoenas and things of that nature.”
Wellmark said the largest group suspected of being overbilled is the Iowa Governmental Health Care Plan, a collective of 33 governmental employers. Ackerman said Two Rivers has helped the Iowa Governmental Health Care Plan save taxpayers millions of dollars in health care coverage costs.
“Every organization that has joined has entered the plan paying lower rates than on previous plans,” he said. “The lower rates, rate stability and higher level of service are all incentives for cities and counties to join. . The average annual increase for the overall program has been 3.1 percent over the past nine years, which has helped all the firefighters, policemen and public employees that IGHCP provides coverage for.”
Wellmark controls more than 80 percent of the insurance market for individual policyholders and more than 60 percent for small employers. Two Rivers has offices in Burlington, Davenport, West Des Moines and other Iowa cities.